Lawmaking is a continuum. No teeth, no follow through, and public policy dissolves into tensile and noise. For years, the Federal Energy Regulatory Commission (FERC) was a watchdog in name only, at least when running down energy-market connivers. Over the last seven years, however, the vacuum of a consumer-oblivious FERC has been filled by a neck-extending resolve. And the reason for an emboldened agency focused on market manipulation loops back, not surprisingly, to Snohomish County.
Every narrative has a villain, and this one had the innocuous-sounding handle, “Enron.” The Enron fiasco could have cost Snohomish County PUD ratepayers millions in termination fees for electricity that went undelivered. The manipulation and scheming was abrasive, and the outrage quotient soared. Sen. Maria Cantwell emerged as the hero and champion bird-dogger, narrowing attention on the very institution charged with tracking the foxes. (At the time, the foxes appeared in charge.)
Cantwell responded by advancing an amendment to the Energy Policy Act of 2005 that enhanced FERC’s capacity to weed out and sanction market manipulators. The amendment includes imparting to FERC the authority to dun companies up to $1 million a day for each violation. Another Cantwell provision put the brakes on a bankruptcy court squeezing the PUD to pony up for phantom energy. The process underlined the agency’s mandate, including the power to invalidate the contracts of Enron-style villains.
The law was just the beginning, one element of that continuum. What matters are outcomes, and that requires changing the agency’s organizational culture. The Energy Policy Act laid the groundwork, dedicating more money and corralling federal eggheads who comprehend arcane financial and energy markets. Meaningful change, bureaucrat by bureaucrat, took root.
As a result, FERC has seized its anti-manipulation calling, conducting 107 investigations and securing civil penalties of $294 million and $155 million in disgorgement of profits. Oversight also extends to big banks gaming energy prices (FERC has targeted JPMorgan Chase and is now looking at Barclays.) The indifferent energy cop has morphed into the vigilant, Eliot Ness cop.
“Washingtonians have not forgotten how Enron schemes like ‘Get Shorty’ and ‘Fat Boy’ caused people to lose their homes, businesses and pensions,” Cantwell said. “By ensuring energy and financial markets are transparent and functioning properly, FERC is helping to prevent such a crisis from happening again.”
Cantwell has swung from inveterate critic to FERC cheerleader, and the reform template is something other regulatory agencies, including the Federal Trade Commission (FTC) and the Commodities Trading Futures Commission (CTFC) could emulate.
Bolstering the FTC and CTFC’s capacity to go after crooks and energy fixers is Cantwell’s latest mission. She’s building on an impressive record.
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